Privatization Development in Taiwan: Background and Issues

Privatization Development in Taiwan: Background and Issues

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INTRODUCTION

For more than two decades, privatization has been one of the major public polices emphasized by many developed and developing countries to reduce the role of the state in national economies and to increase government performance and efficiency (e.g., de Ru and Wettenhall, 1990; Cook and Kirkpatrick 1988). For example, privatization policy has been emphasized in the developed countries such as the United Kingdom (e.g., Dunsire, 1990; Fraser and Wilson, 1988; Kay, et al., 1986; Heald, 1985), France (e.g., Delion, 1990; Trivedi, 1988), and the United States (e.g., Seidman, 1990; Henig, 1989-90; Pack, 1987; Savas, 1982). Similarly, privatization policy has also been adopted by several newly industrializing and developing countries in Asia (e.g., India, Malaysia, Singapore, Korea), Africa (e.g., Kenya, Nigeria, Ghana), and Latin America (e.g., Chile, Honduras, Peru) (Shin, 1990; Ayubi, 1990; Lim and Moore, 1989; Ramanadbam, 1989; Cook and Kirkpatrick, 1988; and Stren, 1988).

Since the 1980s, privatization policy has been developed by the Taiwanese government for different reasons. First, privatization policy was adopted by the government to achieve the goal of economic liberalization and internationalization policy that was designed to reduce government control and to enhance international investment and competition (Lu, 1985). Privatization policy was further promoted by policymakers because of the development of political democratization movement to eliminate the control of ruling Kuomintang (KMT) party in economic activities. Based on the concepts of New Public Management, researchers of public administration have also supported the development of privatization policy to remove bureaucratic problems in old state-owned enterprises (SOEs) and to increase operational efficiency for new public projects.

The purpose of this symposium is to introduce research findings about the implementation of privatization policy in Taiwan. The findings of the symposium will contribute to the literature of privatization and administrative reform so that researchers can better understand the phenomenon of privatization policy (de Ru and Wettenhall, 1990). This paper reviews important information about major concepts and strategies of privatization as well as motives and background of Taiwan's privatization. The paper further provides summaries of three symposiums articles and discussions of privatization lessons and challenges.

PRIVATIZATION CONCEPTS AND STRATEGIES

While privatization policy has been very popular among policymakers and researchers, the term privatization means different things to different people. In the United States, privatization has been referred to as "any process aimed at shifting functions and responsibilities, in whole or in part, from the government to the private sector" (United States General Accounting Office, 1997:46). Seidenstat (1996) offers similar definition and explaines privatization as "the transfer of ownership, control, or operation of an enterprise or function form the government/public sector to the private sector." At the international level, the term privatization includes various meanings because of the individual political and economic situations in many countries. For example, Cook and Kirkpatrick (1988: 3-4) explain the term privatization from three approaches: (1) denationalization or divestiture, which means a change in the ownership of an enterprise (or part of an enterprise) from the public to the private sector; (2) deregulation, which involves the liberalization of entry into activities previously restricted to public sector enterprises; and (3) contracting-out, which relates to the transference of the provision of goods or services from the public to the private sector, while government retains ultimate responsibility for supplying the service.

These different definitions are closely related to the background and motives of privatization policy. …